Barak's Funding Scandal Overshadows Peacemaking Woes

By Julie Stahl | July 7, 2008 | 8:07 PM EDT

Jerusalem ( - A month after he began the year on apparently firm footing, Israeli Prime Minister Ehud Barak is facing crises on several fronts - and none more pressing than at home.

The new year saw Israeli-Syrian talks back on track for the first time in four years, as well as high hopes that Israel and the Palestinian Authority could reach their February 13 deadline for an agreement on a framework for "final status" negotiations.

A month later, Barak is facing a deadlock in talks with Damascus, an escalation in Hizb'allah violence against Israeli troops and their Christian allies in southern Lebanon, and a new "crisis" in talks with the PA.

But the biggest challenge Barak now faces is at home, where police have launched an investigation into the way his party raised funds to help him win the race for prime minister last year.

Israel's two leading Hebrew dailies published polls on Friday saying a majority of Israelis did not believe Barak was telling the truth when he pleaded ignorance of funding irregularities.

A routine audit of last year's campaign fund-raising turned up questionable donations made on Barak's behalf to bogus tax-exempt associations. The prime minister said he had given orders to run a "by-the-book" campaign but had not checked to make sure his instructions were carried out.

He claims to have known nothing of the illegal funds, which came from abroad.

Around 70 percent of respondents in a survey by Israel's largest daily Yediot Ahronot said they believed Barak was involved with the tax-exempt groups. Ma'ariv found that 53 percent of those surveyed did not believe Barak at all regarding the campaign financing groups.

"The people have spoken," political science professor Gideon Doron from Tel Aviv University told "It really puts a big dent into his credibility... Now he's fighting to secure his reputation."

The problem, Doron said, is that Barak's statement about the campaign fund-raising did not line up with Barak's image as a "controlling" leader - "the image we've learned to know."

Now that the image had been shattered, Barak would have to "work harder to convince the people" that any treaty he reaches with Syria or the PA is what he proclaims it to be, Doron added.

A police investigation into sources of the questionable campaign funds is likely to take a long time, and some say a drawn-out probe probably would have less of an impact than one that reaches a swift conclusion.

One of the key questions investigators hope to answer is where the foreign funds came from.

There are strict rules and regulations governing domestic money contributed to election campaigns, Doron said, but not so with foreign money.

Money from the Jewish community abroad has always been contributed to the building up of Israel. But Israel did not want "foreign money to influence [its] politicians." It was very serious, Doron added, that the sources of the money were not known.